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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarterly period ended March 31, 2002.

                                       Or

[_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         Exchange Act of 1934 for the transition period from _______ to _______.

                         Commission File Number: 0-22401

                              BIONX IMPLANTS, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)

          Pennsylvania                                   22-3458598
          ------------                                   ----------
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                     Identification No.)

                            1777 Sentry Parkway West
                             Gwynedd Hall, Suite 400
                          Blue Bell, Pennsylvania 19422
                          -----------------------------
           (Address of principal executive office, including zip code)

                                  215-643-5000
                                  ------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                   Yes [X]    No [_]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

At May 3, 2002 there were  10,862,127  shares of Common Stock,  par value $.0019
per share, outstanding.
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<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES


                                      INDEX

                                                                           Page

Part I.   Financial Information

Item 1.   Consolidated Financial Statements

              Consolidated Balance Sheets at December 31, 2001 and
                March 31, 2002 (Unaudited)                                   3

              Consolidated Statements of Operations for the Three
                Months Ended March 31, 2001 and 2002 (Unaudited)             4

              Consolidated Statements of Cash Flows for the Three Months
                Ended March 31, 2001 and 2002 (Unaudited)                    5

              Notes to Consolidated Financial Statements (Unaudited)         6

Item 2.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                         8

Item 3.   Quantitative and Qualitative Disclosures about Market Risk        13


Part II.  Other Information

Signatures                                                                  14

                                        2
<PAGE>
                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE><CAPTION>
                                                          DECEMBER 31,     MARCH 31,
                                                              2001           2002
                                                          ------------   ------------
                                                                          (Unaudited)
<S>                                                      <C>            <C>
ASSETS

Current assets:
Cash and cash equivalents                                 $      4,985   $      4,531
Trade accounts receivable, net of allowance of $246 as
  of December 31, 2001 and $256 as of March 31, 2002             2,467          2,600
Inventory, net                                                   3,704          3,571
Grants receivable                                                   95             48
Related party receivables                                          529            516
Other receivables                                                    8              9
Prepaid expenses and other current assets                          340            563
Deferred tax assets                                                798            798
                                                          ------------   ------------
Total current assets                                            12,926         12,636
Plant and equipment, net                                         2,062          1,940
Goodwill, net (Note 4)                                           2,905          2,905
Intangibles, net (Note 4)                                          922            958
                                                          ------------   ------------
Total assets                                                    18,815         18,439
                                                          ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Trade accounts payable                                    $      1,777   $      1,357
Long - term debt, current portion                                   35             35
Accrued and other current liabilities                            1,392          1,329
                                                          ------------   ------------
Total current liabilities                                        3,204          2,721
Long-term debt                                                     349            327
Subordinated debt                                                  145            184
                                                          ------------   ------------
Total liabilities                                                3,698          3,232
                                                          ------------   ------------
STOCKHOLDERS' EQUITY

Preferred stock, par value $0.001 per share, 8,000,000
  shares authorized, none issued and outstanding                     -              -
Common stock, par value $0.0019 per share, 31,600,000
  authorized, 10,864,906 shares issued as of December
  31, 2001 and March 31, 2002                                       21             21
Treasury stock, 2,779 shares as of December 31, 2001
  and March 31, 2002                                                (8)            (8)
Additional paid-in-capital                                      39,986         39,986
Accumulated deficit                                            (23,819)       (23,737)
Amounts due from employees related to stock purchases              (38)           (30)
Accumulated other comprehensive income (loss)                   (1,025)        (1,025)
                                                          ------------   ------------
Total stockholders' equity                                      15,117         15,207
                                                          ------------   ------------
Total liabilities and stockholders' equity                $     18,815   $     18,439
                                                          ============   ============
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                        3
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE><CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              2001           2002
                                                          ------------   ------------
<S>                                                      <C>            <C>
Revenues:
Product sales                                             $      4,931   $      4,736
Grant revenues                                                      50             30
                                                          ------------   ------------
Total Revenues                                                   4,981          4,766

Cost of goods sold                                               1,547          1,284
                                                          ------------   ------------

Gross profit                                                     3,434          3,482

Selling, general and administrative                              3,086          2,732
Research and development                                           876            677
Patent and litigation expense                                       64             25
                                                          ------------   ------------

Total operating expenses                                         4,026          3,434
                                                          ------------   ------------

Operating profit (loss)                                           (592)            48

Other income and expense
Interest income                                                     76             18
Interest expense                                                     -             (4)
Other, net                                                         (52)            20
                                                          ------------   ------------
Total other income and expense                                      24             34
                                                          ------------   ------------

Income (loss) before provision for income taxes                   (568)            82

Provision for income taxes                                           -              -

Net income (loss) (Note 3)                                $       (568)  $         82
                                                          ============   ============

Income (loss) per share:
     Basic                                                $      (0.05)  $       0.01
     Diluted                                                     (0.05)          0.01

Shares used in computing income (loss) per share:
     Basic                                                      10,819         10,862
     Diluted                                                    10,819         11,320
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                        4
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (In Thousands)
                                   (Unaudited)
<TABLE><CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              2001           2002
                                                          ------------   ------------
<S>                                                      <C>            <C>
Cash flow from operating activities:

Net Income (Loss) (Note 3)                                $       (568)  $         82

Adjustments to reconcile net income (loss) to net
  cash used in operating activities:
         Depreciation and amortization                             312            230
         Consignment amortization                                  158              -

Change in assets and liabilities:
Decrease in inventory, net                                         252            133
Increase in accounts receivable, net                               (95)          (133)
Decrease in grant receivable                                        13             47
(Increase) decrease in related parties                             (41)            13
(Increase) decrease in prepaid expenses and other
  current assets                                                    35           (223)
(Decrease) in trade accounts payable                            (1,135)          (420)
Increase (decrease) in accrued and other current
  liabilities                                                       44            (63)
                                                          ------------   ------------

Net cash used in operating activities                           (1,025)          (334)

Cash flow from investing activities:
         Purchases of plant and equipment                          (91)           (81)
         Purchases of  intangibles                                 (57)           (64)
                                                          ------------   ------------
Net cash used in investing activities                             (148)          (145)

Cash flow from financing activities:
         Borrowing (repayment) of long-term and
           subordinated debt                                        (7)            17
         Proceeds from employee investment plan                      -              8
                                                          ------------   ------------

Net cash provided by (used in) financing activities                 (7)            25
                                                          ------------   ------------

Net (decrease) in cash and cash equivalents                     (1,180)          (454)
Cash and cash equivalents at beginning of period                 7,050          4,985
                                                          ------------   ------------
Cash and cash equivalents at end of period                $      5,870   $      4,531
                                                          ============   ============

Supplemental disclosure of cash flow information:

         Cash paid for interest                           $          -   $          -
         Cash paid for taxes                              $          -   $          -
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                        5
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. BASIS OF PRESENTATION

The accompanying financial statements have been prepared by Bionx Implants, Inc.
(the "Company") and are unaudited.  In the opinion of the Company's  management,
all adjustments (consisting solely of normal recurring adjustments) necessary to
present  fairly the Company's  consolidated  financial  position as of March 31,
2002,  and the Company's  consolidated  results of operations and cash flows for
the three  months  ended  March  31,  2001 and 2002,  have  been  made.  Certain
information  and  footnote   disclosures   required  under  generally   accepted
accounting  principles  have been  condensed  or omitted  from the  consolidated
financial  statements and notes thereto  presented  herein pursuant to the rules
and  regulations  of the SEC. The  consolidated  financial  statements and notes
thereto  presented  herein  should  be read in  conjunction  with the  Company's
audited  consolidated  financial statements for the year ended December 31, 2001
and notes thereto  included in the Company's  Annual Report on Form 10-K for the
year ended  December 31, 2001 filed with the SEC. The results of operations  and
the cash flows for the three  months  ended March 31,  2002 are not  necessarily
indicative  of the results to be expected  for any other  interim  period or the
entire fiscal year.

2. INVENTORY

Inventory consists of the following components as of December 31, 2001 and March
31, 2002: (in thousands)

                                                  December 31,     March 31,
                                                      2001           2002
                                                  ------------   ------------

Raw materials                                     $        692   $        586
Finished goods - Implants                                2,301          2,088
Finished goods - Instruments                             3,381          3,223
Instruments on consignment                               2,269          2,098
                                                  ------------   ------------
                                                         8,643          7,995
  Less:
    Inventory reserve for obsolete and excess
       Instruments and implants                         (4,939)        (4,424)
                                                  ------------   ------------

                                                  $      3,704   $      3,571
                                                  ------------   ------------


                                        6
<PAGE>
3. NET INCOME (LOSS) PER SHARE

Basic earnings (loss) per share is computed using the weighted average number of
shares of common stock  outstanding  during the period.  Diluted earnings (loss)
per share is computed using the weighted  average number of common plus dilutive
potential common shares outstanding  during the period.  Potential common shares
consist of stock options and warrants using the treasury stock method. For March
31, 2001 these options and warrants have been excluded from the dilutive  losses
per share  calculation  as their effect would be  antidilutive.  Shares used for
both the basic loss per share and diluted loss per share were 10,819,464 for the
quarter ended March 31, 2001 and  10,862,127  and 11,319,735 for basic and fully
diluted earnings per share, respectively, for the quarter ended March 31, 2002.

The  following  tables set forth the  calculation  of the total number of shares
used in the  computation  of net income  (loss)  per common  share for the three
months ended March 31, 2001 and 2002:

                                                  Three Months Ended March 31
                                                  ---------------------------
                                                      2001           2002
                                                  ------------   ------------
Shares used in computing basic
earnings (loss) per share                           10,819,464     10,862,127

Incremental shares from assumed exercise
of dilutive options and warrants                             -        457,608
                                                  ------------   ------------
Shares used in computing diluted earnings
(loss) per share                                    10,819,464     11,319,735
                                                  ============   ============


4. GOODWILL AND INTANGIBLES

At March 31,  2002,  the  Company  has net  goodwill  of $2.91  million  and net
intangibles (patents) of $958,000.  The Company has adopted Financial Accounting
Standards No. 142, Goodwill and Other Intangible  Assets ("FAS 142"),  effective
January 1, 2002,  and  accordingly no longer  amortizes  goodwill and intangible
assets with  indefinite  lives.  FAS 142 requires the Company to complete a test
for goodwill impairment within six months from the date of adoption. The Company
has  completed the  impairment  test and  determined  that goodwill has not been
impaired. The following table is provided to disclose what net income would have
been had FAS 142 been adopted in prior periods:

                                                  For the three months ended
                                                           March 31,
                                                      2001           2002
                                                  ------------   ------------
Reported net income (loss)                        $       (568)  $         82
Add back:  goodwill amortization                            52              -
                                                  ------------   ------------
Adjusted net income (loss)                                (516)            82
                                                  ============   ============

Basic earnings per share as reported              $      (0.05)  $       0.01
Adjusted basic earnings per share                        (0.05)          0.01
Diluted earnings per share as reported                   (0.05)          0.01
Adjusted diluted earnings per share                      (0.05)          0.01


5. INTEREST AND OTHER INCOME

In the three months ended March 31, 2001 the Company  generated  interest income
of approximately  $76,000. In the three months ended March 31, 2002, the Company
generated  interest income of approximately  $18,000 and had interest expense of
approximately $4,000,  resulting in net interest income of $14,000.  During that
same  period the  Company had other  income of  $20,000,  consisting  of foreign
exchange gains.

                                        7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

Statements  regarding  future  performance in this Quarterly Report on Form 10-Q
constitute  forward-looking  statements under the Private Securities  Litigation
Reform Act of 1995 ("Forward looking Statements").  The Company's actual results
could  differ  materially  from  those   anticipated  by  such   forward-looking
statements as a result of certain factors,  including those set forth in Exhibit
99.1 to the Company's Annual Report on Form 10-K for the year ended December 31,
2001.

The Company  was  founded in 1984 to develop  certain  resorbable  polymers  for
orthopedic uses. The Company has incurred substantial operating losses since its
inception and as of March 31, 2002 had an accumulated  deficit of  approximately
$23.8  million.  Such losses  have  resulted  to a large  extent  from  expenses
associated    with   the    development   and   patenting   of   the   Company's
Self-Reinforcing(TM)  technologies and resorbable implant designs,  pre-clinical
and  clinical  studies,  the  write  off  and  reserve  of  impaired  inventory,
preparation  of  submissions  to the FDA and foreign  regulatory  agencies,  the
development  of sales,  marketing and  distribution  channels,  the write-off of
acquired  in-process  research  and  development  and  the  development  of  the
Company's manufacturing  capabilities.  The Company has recorded losses in prior
periods,  including a loss of approximately $2.5 million in 2001, but has posted
profits for the last two quarters of $187,000 and $82,000 for the quarters ended
December  31,  2001,  and March 31,  2002,  respectively.  The  Company has been
focusing on  expanding  its market share within the  procedure  specific  Sports
Medicine  market and has  introduced  several new products which have started to
offset the sales decreases of the Meniscus Arrow. No assurance can be given that
revenues will grow in the future or that revenues  will exceed  expenses.  There
can be no assurance that the Company will be able to successfully  commercialize
its products or that the Company will be profitable again.

During 2002 the Company  continued to implement its initiatives,  begun in 2000,
to refocus its business and to reallocate critical resources. During the quarter
ended September 30, 2001, the Company took a  restructuring  charge of $343,000.
The charge related  primarily to severance for sales and order entry  personnel.
This reduction was made to eliminate  redundancies  and  streamline  operations.
During the first  quarter of 2002,  the Company  reported net income of $82,000,
resulting  in  earnings  per basic and  diluted  share of $0.01.  For the fourth
quarter of 2001,  the Company had net income of $187,000,  or earnings per basic
and diluted share of $0.02.  These  results are  primarily  due to  management's
implementation  of operational  improvement  plans.  Management is continuing to
focus on and to evaluate monthly the effects of these initiatives. No assurances
can be given that the Company's initiatives will result in profitable operations
in the future.

The Company has one business  segment -  bioabsorbable  implants and instruments
for orthopedic  surgical use in bone and bone to soft tissue procedures.  Sports
Medicine and Fracture  Fixation are product  lines sold for these  applications.
During 2001,  approximately  91% of the Company's  sales were implants,  5% were
associated instruments and 4% were other revenues. During the three months ended
March 31, 2002,  approximately 92% of the Company's sales were implants, 5% were
associated  instruments and 3% were other  revenues.  The instruments are needed
for surgical  procedures  involving  the  Company's  implants and are  therefore
inexorably  linked to implant sales.  Historically a substantial  portion of the
Company's revenues resulted from sales of the Meniscus Arrow, which received FDA
clearance in March 1996.  During the twelve  months ended  December 31, 2000 and
2001 and the three months ended March 31, 2002, Meniscus Arrow sales represented
59%,  47%, and 42%,  respectively,  of total  Company  product  sales.  Products
introduced  in 2000 and 2001  contributed  22% of total  product  sales  for the
period ended March 31, 2002. This represents a 16% increase from the same period
ended March 31, 2001.

The Company sells implants and stainless steel surgical instruments to hospitals
and surgery centers in the United States and to  distributors  in  international
locations.  In certain  more  limited  cases the  Company  consigns  implants to
hospitals in the United States,  primarily  during an  introductory  period when
surgeons  are  evaluating  these  products.  In order to support  implant  sales
efforts in the United  States  the  Company  will,  in  limited  cases,  provide
instruments free of charge to hospitals and surgery  centers.  The sale of these
instruments  results  in margins  which are  typically  lower  than the  margins
applicable to the Company's implant products.  For financial statement purposes,
revenues from the sale of  instrumentation  systems are included  within product
sales and costs  associated  with such systems are included within cost of goods
sold.

As part of the Company's  marketing efforts,  the Company's  marketing staff and
regional sales managers participate in conventions attended by surgeons in which
they  demonstrate  the products in models of human bone and show surgeons how to
use the  products.  These  individuals  may also attend a surgical  procedure to
answer any questions the surgeon may have. None of these efforts are obligations
related to a contract or a sale but are done to enhance  customer  relationships
at the  discretion  of the Company.  The Company is not obligated on any sale of
product to support or train.  The Company  sells its  products  through  managed
networks of independent sales agents,  distributors and dealers. In the U.S. the
Company  handles all invoicing  functions  directly and pays  commissions to its
independent sales agents or representatives.  Outside the U.S. the Company sells
its products  directly to  distributors  and dealers at  discounts  that vary by
product and by market.  Accordingly,  the Company's  U.S. sales result in higher
gross margins than international sales.

Bionx  continues  to  evaluate  the  formation  of  strategic  partnerships  for
craniofacial  products. The Company believes that with the appropriate strategic
partner who has a focused  marketing and sales effort,  coupled with key surgeon
champions  and a unique  product  portfolio,  resorbable  fixation  products can
effectively penetrate this craniofacial market. Bionx currently  participates in
this  craniofacial   market  and  has  established  a  leadership  position  for
resorbable plates and screws. If working with the appropriate

                                        8
<PAGE>
strategic  partner,  the  Company  believes  that it can  leverage  its  current
position  and expand its  market  presence  by  introducing  new and  innovative
products directed towards these surgical specialties.

The Company has intellectual property and techniques with application outside of
the  orthopedic  market  and for  which it may seek to  establish  licensing  or
distribution  agreements  with  strategic  partners to fund and develop  certain
products and to market and  distribute  products that the Company  elects not to
distribute   through  its  managed   networks  of   independent   sales  agents,
distributors  and dealers.  No  assurance  can be given that the Company will be
able to enter into license arrangements on satisfactory terms.

During  2000 the Company  began  invoicing  European  customers  in Euro's.  The
majority of the Company's sales are in the United States,  and most of the sales
to international markets are in Europe and Asia. During 2000, 2001 and the first
three months of 2002, international product sales represented approximately 18%,
21% and 21% respectively,  of the Company's total product sales. The Company has
foreign operations in Finland consisting  primarily of manufacturing and certain
R&D  and  marketing  functions.  The  Company  invoices  more  than  85%  of its
consolidated revenues in US Dollars.  Approximately 75% of the expenses incurred
by the Company are denominated in US Dollars. The majority of other revenues and
expenses  are in Euro's.  Euro  denominated  expenses  exceed  Euro  denominated
revenues.  The  dollar is the  functional  currency  for the  Company's  Finnish
operation,  consequently,  a weakening in the Euro has a favorable impact on the
Company while a  strengthening  has an unfavorable  impact.  Currently,  foreign
exchange could reduce annual income before taxes by approximately $50,000 if the
Euro  increases in value by 1% depending  upon the extent of the Company's  Euro
denominated net expenses and/or net assets for the period under evaluation.  The
Company may seek to manage its foreign  currency  risk  through the  purchase of
foreign currency options and forward contracts in the future.  However, there is
a cost to such  hedging and, for 2001 and the three months ended March 31, 2002,
the Company did not hedge such  exposures.  No assurances can be given that such
hedging  techniques,  if  implemented,  will protect the Company  from  exposure
resulting from relative  changes in the economic  strength of the Euro.  Foreign
exchange  transaction  gains and losses can vary  significantly  from  period to
period.

Periodically  the Company has evaluated  constructing  or leasing  manufacturing
facilities  in  the  United  States  to  supplement  its  Finnish  manufacturing
capabilities.  At this time the Company has  decided to  supplement  its Finnish
manufacturing  by using third party  contract  manufacturers,  primarily  in the
United States, to produce specific implants or instruments.

The Company's operating losses have resulted in net operating loss carryforwards
("NOL") of  approximately $ 8.1 million in federal NOL and $2.6 million in state
NOL, which are available to offset future federal and state taxable  income,  if
any, through 2001 and 2006, respectively.  Additionally,  the Company had an NOL
of approximately $4.3 million for foreign income tax purposes which is available
to offset future  foreign  taxable  income,  if any,  through 2011. For federal,
state and foreign  income tax  reporting  purposes as of December 31, 2001,  the
extent to which such  carryforwards  are  available  to offset  future U.S.  and
Finnish taxable income may be limited as a result of various  ownership  changes
that have  occurred in recent  years.  Additionally,  because tax laws limit the
time during which these  carryforwards  may be applied against future taxes, the
Company may not be able to take full advantage of these carryforwards for income
tax  purposes.  Furthermore,  income earned by a foreign  subsidiary  may not be
offset  against  operating  losses of U.S.  entities.  The  statutory  tax rates
applicable to the Company and its foreign  subsidiaries vary substantially.  Tax
rates have fluctuated in the past and may do so in the future.

The Company's results of operations have fluctuated in the past on an annual and
quarterly  basis and may  fluctuate  significantly  from period to period in the
future,  depending on many  factors,  many of which are outside of the Company's
control.  Such factors include the timing of government  approvals,  the medical
community's  acceptance of the Company's  products,  the success of  competitive
products,  the ability of the  Company to enter into  strategic  alliances  with
corporate  partners,  expenses  associated with patent  matters,  the results of
regulatory inspections and the timing of expenses related to product launches.

In order to develop new products, and to satisfy the needs of surgeons, Bionx is
committed to developing  strong surgeon  relationships  and  supporting  medical
education.  The Company continues its commitment to medical organizations in the
country by remaining a Founding Donor to AANA (Arthroscopy  Association of North
America),  which is one of the largest  Sports  Medicine  associations  in North
America. Also, during the first quarter of 2002, Bionx has joined ASMI (American
Sports  Medicine  Institute),  whose  mission is to improve  the  understanding,
prevention,  and  treatment  of  sports-related  injuries  through  research and
education.  The Company also  continued its new product  introductions  with the
release of the  Contour  Meniscus  ArrowTM  and  Biocuff CTM within the last two
quarters.  These new product  introductions  highlight the Company's  ability to
leverage its technology in resorbable  polymer's across varied product lines and
offerings.  The Companys'  recently  formed Surgeon  Advisory Board continues to
assist in the development of procedure-specific resorbable products. There is no
assurance that these actions will result in increased sales revenues.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations (SFAS No. 143). SFAS No. 143 requires the Company to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation  associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development and/or

                                        9
<PAGE>
normal use of the assets.  The Company also records a corresponding  asset which
is depreciated over the life of the asset. Subsequent to the initial measurement
of the asset retirement  obligation,  the obligation will be adjusted at the end
of each  period to  reflect  the  passage of time and  changes in the  estimated
future cash flows  underlying the  obligation.  The Company is required to adopt
SFAS No. 143 on January 1, 2003.

In July 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141, Business  Combinations ("FAS 141") and
No. 142,  Goodwill and Other Intangible Assets ("FAS 142"). FAS 141 requires all
business  combinations  initiated  after June 30, 2001 to be accounted for using
the purchase method.  The Company adopted FAS 142 effective January 1, 2002. FAS
142 eliminates the amortization of goodwill and certain other intangible assets.
It also  requires the Company to complete a test for  impairment of these assets
annually,  as well as a transitional  goodwill impairment test within six months
from the date of  adoption.  As of  December  31, 2001 and March 31,  2002,  the
Company had net goodwill of  $2,905,133.  For the year ended  December 31, 2001,
the Company  recorded  $1,034,030  of goodwill  amortization.  The Company is no
longer  amortizing  goodwill.  The  adoption  of FAS 142 did not have a material
effect on the Company's  financial position or results from operation,  however,
market conditions and other  uncertainties may change the Company's  exposure in
the future.  The table  disclosed in Note 4 in Notes to  Consolidated  Financial
Statements  shows  what net income  would have been had FAS 142 been  adopted in
prior periods.

In August 2001, the Financial  Accounting  Standards Board issued  Statements of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of  Long-Lived  Assets ("FAS 144").  The Company  adopted FAS 144 as of
January 1,  2002.  FAS 144  requires  that  long-lived  assets be  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset
to future net cash flows expected to be generated by the asset.  If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is  recognized  by the amount by which the carrying  amount of the asset exceeds
the fair value of the asset.  Assets to be disposed of are reported at the lower
of the carrying  amount or fair value less costs to sell.  The provisions of FAS
144 are  effective for financial  statements  issued for fiscal years  beginning
after  December 15, 2001, and interim  periods  within those fiscal years,  with
early application encouraged.  The provisions of this statement generally are to
be applied  prospectively.  At this time,  the Company does not believe that the
adoption  of FAS 144 will  have a  material  effect on the  Company's  financial
position or results of operations,  but understands  that market  conditions and
other uncertainties may change the Company's exposure in the future.

RESULTS OF OPERATIONS

TOTAL REVENUES
Total revenue decreased by 4.3% from $5.0 million during the quarter ended March
31, 2001 to $4.8 million during the quarter ended March 31, 2002. Total revenues
have increased by 8.7% from $4.4 million in the quarter ended September 30, 2001
and by 1.9% from $4.7 million in the quarter ended December 31, 2001.

PRODUCT SALES
The  Company's  product  sales  decreased by 4.0% from $4.9  million  during the
quarter ended March 31, 2001 to $4.7 million  during the quarter ended March 31,
2002.  The decrease in Meniscus  Arrow sales was partially  offset by increasing
sales of  products  introduced  during  2000 and 2001.  Sales of these  products
increased by 16% from  $869,000  during the quarter ended March 31, 2001 to $1.0
million during the quarter ended March 31, 2002.

GLOBAL SPORTS MEDICINE
Consolidated sales of Sport Medicine products, including instruments,  decreased
6.9% from $3.6  million  during the three  months  ended  March 31, 2001 to $3.3
million during the three months ended March 31, 2002. Non -Meniscus  Arrow sales
accounted for 39% of the first quarter 2002 Sports Medicine product sales,  with
sales growth of 114% over the three  months  ended March 31,  2001.  The Company
intends to continue to expand its product lines,  offering the surgeon  improved
clinical solutions throughout all of its product families.

FRACTURE FIXATION PRODUCTS
Consolidated  sales of Fracture  Fixation  products,  which  include  Orthopedic
Trauma and Craniofacial  product lines,  increased 3.8% from $1.3 million during
the three months  ended March 31, 2001 to $1.4  million  during the three months
ended March 31, 2002.  The primary reason for the increase is higher Asian sales
of the Company's orthopedic trauma line.

GLOBAL ORTHOPEDIC TRAUMA
Consolidated  sales  of  Orthopedic  Trauma  products,   including  instruments,
increased 9.0% from $1.0 million during the three months ended March 31, 2001 to
$1.2 million during the three months ended March 31, 2002, primarily as a result
of  increased  sales and  marketing  activities  in the  international  markets,
primarily Asia.

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<PAGE>

GLOBAL CRANIOFACIAL
Consolidated sales of Craniofacial products,  including  instruments,  decreased
15.6% from $0.3  million  during the three  months  ended March 31, 2001 to $0.2
million,  during the three months ended March 31, 2002. This is primarily due to
the Company reducing its sales and marketing efforts for this product line.

OTHER SALES
Other sales  consist of grant  revenues  totaling  $30,000 for the quarter ended
March 31, 2002, compared with $50,000 for the quarter ended March 31, 2001. This
revenue is generated  from grants  obtained from a Finnish  government  research
organization which funds certain research and development projects. These grants
have declined as the Company has decided to concentrate its development  efforts
on projects  which  enable the Company to meet  short-term  horizons for product
introductions and which utilize internally generated funding.

INTERNATIONAL SALES
International sales for the quarter ended March 31, 2002 increased 7.5% from the
quarter ended March 31, 2001 to $1.0 million or 21% of total product sales.  The
Company is beginning to capitalize on the  aggressive  marketing  plans which it
implemented  during 2001, and which included adding resources to stimulate sales
growth  in  future  quarters,   and  to  achieve  market  penetration  with  new
country-specific distributors.

GROSS PROFIT
The Company's gross profit  increased 1.4% from $3.4 million to $3.5 million for
the three months ended March 31, 2001, and March 31, 2002,  respectively.  Gross
profit was 73% of sales for the three months  ended March 31, 2002,  which is an
improvement  from 69% for the period  ended  March 31,  2001.  This  significant
improvement is a result of the Company's  manufacturing and operational  process
changes.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,  general  and  administrative  expenses  decreased  by 11.5%  from $3.1
million in the first  quarter of 2001 to $2.7 million in the first quarter 2002.
Such  expenses  were 63% and 58% of revenues  for the first  quarter of 2001 and
2002, respectively.  The total reduction in SG&A expenses results primarily from
the  organizational  changes the Company has effected  during the latter half of
2001 and its increased ability to leverage web-based  technologies to assist its
customers.

RESEARCH AND DEVELOPMENT
While the Company continues to be committed to providing  cutting-edge  products
for an  increasingly  competitive  Sports  Medicine  environment,  research  and
development  expenses totaled $0.7 million or 14% of sales for the first quarter
of 2002, down from $0.9 million or 18% of sales for the same period of 2001. The
decrease in R&D spending, both in gross dollars and as a percentage of sales, is
a result of the Company's reduced spending on projects with longer time horizons
as the Company  emphasized  projects  that have shorter  development  cycles;  a
reduction in the  spending  levels for  resorbable  stent  development;  and its
continued  commitment to maintaining  cost-effective  product  development.  The
Company  continues to partner with key surgeon  champions in the Sports Medicine
and Fracture Fixation fields to develop new products.  The research,  design and
development  efforts use the Company's  Surgeon Advisory Board, and experts from
other industry  organizations,  alongside the Company's research engineers.  The
Company's strategy of providing procedure specific surgical solutions depends on
its ongoing product development in order to bring innovative new products to the
market and the Company's spending reflects  expenditures on development of those
new products within its established  market and on new products and technologies
that are for therapeutic applications outside of established markets.

The Company believes that the resorbable stent business has a significant market
size,  a  well-defined   regulatory   pathway,   and  has  therapeutic   outcome
characteristics that may favor resorbable stents.  However,  given the Company's
limited cash  resources,  management  is exploring  other  funding and licensing
opportunities  with respect to the Stent business and has limited Stent spending
to minimal amounts.

PATENT AND LITIGATION EXPENSE
Patent and litigation  expense  decreased 61% from $64,000 to $25,000 during the
first quarter of 2001 and 2002, respectively. This is largely due to the current
status of the  proceedings  and the fact that  negotiations  have been requiring
less legal assistance than was previously required.

OTHER INCOME AND EXPENSE
In the first quarter of 2002, the Company generated  interest income of $18,000,
interest  expense of  approximately  $4,000,  and net other  income of  $20,000,
resulting in net other income and expense of $34,000.  This compares to interest
income of $76,000 and net

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<PAGE>

other expense of $52,000 in the first quarter of 2001.  The decrease in interest
income is a result of lower  cash  balances  during  the first  quarter  of 2002
compared  to  2001.  Other  income  in  2002  represents  net  foreign  currency
translation  and  transaction  gains  as  opposed  to the net  foreign  currency
translation and transaction losses in 2001.

INCOME TAXES
The Company  recorded no tax  provisions for the first three months of 2002, due
to the availability of net operating loss carryforwards.

NET INCOME
The  Company  reported  net  income  of $ 82,000 or $.01 per  share  (basic  and
diluted) for the quarter  ended March 31, 2002 versus a net loss of $0.6 million
or ($.05) per share (basic and diluted) for the first quarter of 2001.

LIQUIDITY AND CAPITAL RESOURCES

The Company has relied  primarily upon external  (private and public) sources of
equity to fund  operations  and  development.  At March 31, 2002,  cash and cash
equivalents totaled $4.5 million,  which is a decrease of $0.5 million from $5.0
million at December 31, 2001.  The decrease  from December 31, 2001 is primarily
due to decreases in accounts payable and slight  increases in capital  spending.
At March 31, 2002, the Company improved its net working capital position to $9.9
million, or a 5:1 ratio of current assets to current liabilities.

The  Company's  liquidity  is  dependent  primarily  upon its ability to improve
operating  results  and thereby  generate  adequate  cash flow from  operations.
Through 2001, the Company continued to implement its initiatives, begun in 2000,
to refocus its  business and  reallocate  critical  resources.  During the third
quarter ended  September 30, 2001,  the Company took a  restructuring  charge of
$343,000.  The charge  related  primarily to severance for sales and order entry
personnel.  This  reduction was made to eliminate  redundancies  and  streamline
operations.  Management has implemented  operation  improvement plans and during
2002 is  continuing  to focus  on and  evaluate  monthly  the  effects  of these
initiatives.  These plans have  included the  addition of critical  resources in
areas that will have the greatest impact on sales growth and profit improvement;
consolidation of the sales organization  designed to improve sales efficiencies,
increase market coverage,  and reduce the Company's cost of sales;  reduction in
sales administration to reduce the Company's overall selling costs; a refocus of
R&D  investments on new product  introductions  that will provide  complementary
product  offerings in the  short-term;  consolidation  of global  inventories to
reduce the Company's  overall  investment in  inventories  and improve  customer
service levels;  reduction in inventory  levels to improve  inventory turn rates
thereby   reducing  the  Company's  cash   requirements  to  support   inventory
investments;  increases in sales and marketing  efforts designed to expand sales
contributions  from markets outside of the US; and the implementation of surgeon
educational  programs  designed to  increase  surgeon  awareness  and use of the
Company's products.  However, there can be no assurance that these steps will be
successful.  The  Company's  operations  may not provide  sufficient  internally
generated cash flows to meet the Company's projected requirements. The Company's
ability to  continue  to finance  its  operations  will depend on its ability to
achieve profitability by improving sales and margins, its ability to reduce cash
outflows  and,  if  necessary,  its ability to obtain  other  sources of funding
sufficient to support the Company's operations.  No assurances can be given that
such funding will be available on satisfactory terms or at all.

The Company  believes that existing  capital  resources  together with cash flow
from  operations  (if, and to the extent,  generated) will be sufficient to fund
its  operations  during  2002.  This  statement  constitutes  a  Forward-Looking
Statement.   Actual   results  could  differ   materially   from  the  Company's
expectations  regarding its capital requirements and its sources of capital. The
Company's  future  capital  requirements  and the adequacy of available  capital
resources will depend on numerous  factors,  including the Company's  ability to
reverse recent trends and successfully  perform management  initiatives,  market
acceptance of its existing and future products, the successful commercialization
of products in development,  progress in its product  development  efforts,  the
magnitude and scope of such efforts,  acquisition  opportunities,  progress with
preclinical studies, clinical trials and product clearances by the FDA and other
agencies,   the  cost  and  timing  of  the  Company's  efforts  to  expand  its
manufacturing  capabilities,  the cost of  filing,  prosecuting,  defending  and
enforcing  patent  claims  and other  intellectual  property  rights,  competing
technological  and  market  developments,   and  the  development  of  strategic
alliances for the marketing of certain of the Company's products.  The Company's
operations did not produce  positive cash flows during 1994,  1995,  1996, 1998,
1999,  or  2001,  although the Company  did have a  slight  increase  in cash at
December 31, 2000 over  December 31,  1999.  To the extent that funds  generated
from the Company's operations, together with its existing capital resources, and
the net interest  earned  thereon,  are  insufficient to meet current or planned
operating requirements,  the Company will be required to obtain additional funds
through equity or debt financing,  strategic  alliances with corporate  partners
and others, or through other sources.  The terms of any further equity financing
may be dilutive to stockholders  and the terms of any debt financing may contain
restrictive  covenants,  which  limit the  Company's  ability to pursue  certain
courses of action.  The Company does not have any committed sources of financing
and there can be no assurance that  additional  funding,  if necessary,  will be
available on acceptable terms, if at all. Principal  stockholders of the Company
who previously provided funding to the Company

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<PAGE>
and provided  guarantees  to sources of credit have  indicated  that they do not
intend  to  continue  furnishing  such  assistance.  If  adequate  funds are not
available, the Company may be required to delay, scale-back or eliminate certain
aspects of its operations or attempt to obtain funds through  arrangements  with
strategic  partners or others that may require the Company to relinquish  rights
to  certain of its  technologies,  product  candidates,  products  or  potential
markets. If adequate funds are not available, the Company's business,  financial
condition and results of operations could be materially and adversely  affected.
The  sufficiency  of the Company's  capital  reserves with respect to operations
beyond March 31, 2002 will depend primarily upon the Company's operating results
and the extent to which such results are capable of funding anticipated growth.

No  assurances  can be given  that the  Company's  initiatives  will  result  in
profitable operations in the future.

The  Company  was owed  $0.479  million  from  Bionix  B.V.  at March 31,  2002.
Sixty-eight  percent of Bionix B.V.  stock is owned by related  parties.  Bionix
B.V.  beneficially  owns 24.9% of the Company's Common Stock. On April 10, 2002,
Pertti  Tormala,  a director  of the  Company,  on behalf of all of the  Finnish
shareholders of Bionix B.V.  transferred  95,957 shares of the Company's  common
stock to the Company, as payment in full of the outstanding indebtedness.

The Company was able to make  substantial  improvements  in cash flow management
due to its  continued  efforts to complete  the  management  initiatives,  while
continuing to fund research and  development  at 14% of sales during 2002.  This
research funding consisted of investing in new treatment  modalities and product
development that does not result in dramatic sales increases  initially and will
only do so when products are released and gain market acceptance.

The Company's total use of cash and cash  equivalents for 2001 was $2.1 million.
During the first quarter of 2001 and 2002, cash and cash  equivalents  usage was
$1.2 million and $454,000,  respectively.  The reduction in cash usage  resulted
primarily from a decrease in the cash used in operating activities, primarily as
a result of the Company  realizing  net income  during the first quarter of 2002
compared to a net loss in the first quarter of 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's functional currency is the US dollar. However, because the Company
has  revenues  and expenses  that are  Euro-denominated  the Company may seek to
manage its  foreign  currency  risk  through the  purchase  of foreign  currency
options and forward  contracts in the future.  However,  there is a cost to such
hedging.  During  2001,  and the first  quarter  of 2002,  the  Company  did not
purchase  financial  instruments  to manage  foreign  currency  risk.  Currently
foreign  exchange  could reduce  annual  income  before  taxes by  approximately
$50,000 if the Euro  increases in value by 1%  depending  upon the extent of the
Company's Euro  denominated  net expenses and/or net assets for the period under
evaluation.  No  assurances  can  be  given  that  such  hedging  techniques  if
implemented  will  protect the Company from  exposure  resulting  from  relative
changes in the economic strength of the Euro. Foreign exchange transaction gains
and losses can vary significantly from period to period.

No other change since filing of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001.


PART II. OTHER INFORMATION

   (a)    The Registrant did not file any Current Reports on Form 8-K during the
          quarter ended March 31, 2002.

   (b)    Exhibits - None

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<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                       BIONX IMPLANTS, INC.


                                       By:  /s/ Gerard Carlozzi
                                           ------------------------------
                                            Gerard Carlozzi, President
                                            and Chief Executive Officer



                                       By:  /s/ Drew Karazin
                                           ------------------------------
                                            Drew  Karazin
                                            Chief Financial Officer



Dated:  May 15, 2002










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